Home > Uncategorized > Mall Operators Begin Cultivating Startups

Mall Operators Begin Cultivating Startups

Shopping centers hope to get in on the ground floor with retail innovations

Dresses are steamed at Union Station, a gown and bridesmaid’s dress rental startup, which got a $1 million investment from Simon Property. 1, 2015

America’s startup-investing frenzy has reached the shopping mall.

On the prowl for retail innovation, Simon Property Group, the nation’s largest mall developer, has funneled roughly $20 million into 18 startups, mostly over the past 15 months through its venture-capital arm, Simon Venture Group.

In June, Simon invested $1 million in Union Station, an online bridesmaid’s dress rental service. In an early meeting, the two companies brainstormed ways that Union Station—which currently operates a showroom at its New York City headquarters and runs pop-up events around the country—might eventually develop a presence in Simon malls. J. Skyler Fernandes, managing director of Simon Venture Group, has also introduced the startup to roughly a half-dozen possible investors.

“It’s a potential new retail category that Simon doesn’t have in its portfolio of retailers,” said Mr. Fernandes, who was brought in to launch Simon Venture Group last year, having previously worked for Centripetal Capital Partners, a Stamford, Conn., venture firm.

Corie Hardee, 35 years old, said she founded New York-based Union Station in 2012 after realizing that the four most expensive dresses in her closet were bridesmaid’s dresses she had worn just once. The investment from Simon Venture Group “is a great validation of what we are doing,” she said.

Westfield Corp. , another mall developer, runs Westfield Labs, which employs a team of software engineers and invests in—and works with—startups. Indeed, Simon and Westfield are two of five mall operators that are backing the Silicon Valley startup Deliv Inc., a crowdsourced delivery service that connects available, vetted contracted drivers with retailers that need items delivered. The as-needed drivers make it easier for retailers to compete withAmazon.com Inc. and other big e-commerce companies.

Daphne Carmeli, the 51-year-old founder of Deliv, said working with the top mall developers reduces her Menlo Park, Calif., company’s operating costs, provides access to hundreds of retailers and makes it easier to offer a single solution to major retailers with locations around the country.

Speaking about Deliv, Mikael Thygesen, Simon Property’s chief marketing officer and part of the team that vets potential investments, said he believes that using an existing store as a distribution center makes the physical presence more valuable. “Fulfilling from the store is very interesting to us,” Mr. Thygesen said.

Union Station, which rents bridesmaid dresses, is an online business that currently operates a showroom at its New York City headquarters and runs pop-up events around the country. Photo: JOHN TAGGART FOR THE WALL STREET JOURNAL

Simon Property chief executive David Simon (no relation to reporter) launched the fund last year as a way to get better access to startups. The fund is a wholly owned subsidiary of Simon Property, a real-estate investment trust, which operates nearly 200 malls, outlets and other retail properties. Simon Property has about $4.87 billion in annual revenue.

Mr. Simon approves each investment, which can range from $250,000 to $5 million. The Indianapolis-based company had previously made a handful of ad-hoc investments in startups. One of Simon’s startup investments has already produced a return: Shopkick Inc., a shopping-loyalty app, was acquired last year by SK Telecom Co. for $200 million.

“We’re finding out where retailers have their biggest problems and then finding solutions, whether they are useful for Simon or for retail more broadly,” said Mr. Fernandes.

Elsewhere, Simon has made two investments totaling $1.5 million in Fashion Project, an online retailer that also allows consumers to donate gently used clothes and direct proceeds from their sale to the charity of their choice.

Fashion Project “brings people to the mall for donating clothes,” said Mr. Fernandes, who figures he has spoken with more than 1,700 startups since launching the fund. “It brings them back a second time if there are incentives from retailers.”

Last year, Simon ran two pilot projects, allowing customers to register for Fashion Project and pick up donation bags at four of its malls. It also has connected the startup to retailers it could partner with on donation programs, according to Fashion Project co-founder Anna Palmer.

The mall operators’ appetite for investing in startups illustrates how established companies of all stripes are turning to venture funding as a way to stay abreast of the latest innovations in business and business models. There were 686 venture-backed deals with corporate financing last year, the highest since 2001, according to Dow Jones VentureSource.

Home improvement retailer Lowe’s Cos. doesn’t have a formal venture fund but has a dedicated team researching opportunities and making investments in early-stage startups such as Decorist, an online marketplace offering affordable personalized design and décor advice.

Corporations jumped into venture funding in the late-1960s, mid-1980s and dot-com boom of the 1990s, only to retreat when the market soured. The median lifespan of a corporate venture fund has been just one year, according Harvard Business School Professor Josh Lerner. “We’ve seen some element of faddishness about it,” Prof. Lerner said.

Generally, financial “returns from corporate venturing programs have been substantially less than those of independent venture groups,” Prof. Lerner added. But even ventures that aren’t profitable can provide companies with valuable access to potential partners, cutting-edge technology and new business models, he said.

Other potential pitfalls include conflicts of interest between corporate investors, who may view a startup as a potential acquisition candidate, and startups that might find it more lucrative to sell to another buyer or to take their company public.

Jeff Bussgang, a partner with Flybridge Capital Partners, a venture-capital firm based in Boston and New York, typically tells founders of early-stage businesses to wait until their companies are more established before taking corporate funding because their business models and priorities may change, which can put them at odds with a corporation whose priorities are their own strategic interests.

Deliv’s Ms. Carmeli sees the partnership with mall operators as a win-win. “I was able to lock up an ecosystem,” she said. “The mall operators want to see the success of the retailers.”

Hybrid Golf Shoes: A Sporty Look That’s Way Above Par

Golf shoes get a refresh that’s fit for clubbing—and nightclubbing, too. A look at the Puma Golf BioDrive, Royal Albartross Club Crew Domino and Ecco Casual Hybrid

SCHWING! | This green-friendly footwear takes a giant step out of the sand trap. Photo: F. Martin Ramin/The Wall Street Journal, Styling by Anne Cardenas

July 9, 2015

MEET THE NEW swingers: next-generation golf shoes whose slouchy, kicking-it look is dress code-appropriate both on and off the course.

Over the past few years, Hobson Brown—co-founder of Criquet Shirts, an Austin-based maker of golf apparel—has embraced what he calls “the more laid back versions of the walking-shoe-meets-golf-shoe.” Mr. Brown, 40, favors Ecco’s Casual Hybrid, a lace-up, round-toed leather number. The grid of raised squares on the sole allows for a sturdy stance on putts and drives, he explained, but the understated look is the selling point: “They may be less traditional than some courses are used to seeing, but they inject some fun and style into my game.”

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Benjamin Sherman, 44, a weekend golfer in New Orleans, is another convert to this class of shoe. “It’s nice to be able to walk off the course and into a restaurant without a locker-room stop,” he said. “Their soles hold the ground. They’re basically miming running shoes and skater Vans, but they have built-up treads. You could wear some of them to a wedding.” Here are options from across the style spectrum that are at the fore of the scene.

  1. Puma Golf Biodrive Leather Shoes

With its simple lines and two-tone color scheme, this basic evokes Puma’s classic sneakers—yet it does the job nicely when you’re putting or driving. Wear them with anything from jeans to a gray seersucker suit. $120, pumagolf.com

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  1. Royal Albartross Club Crew Domino

Old-school brogue meets vintage American trainer in this dressy full-grain leather shoe, created by the bespoke golf-shoe brand Royal Albartross. The barefoot-shoe king Vibram designed the rubber sole to enhance traction and keep wearers standing tall and steady on the course—or while sipping champagne on a yacht. $370, albartross.com

  1. Ecco Casual Hybrid

Equally well suited for lawn-party jockeying and PGA tourney-hopping, these leather lace-ups are a nod to both old and new golf—a mashup of wing tip and casual sneaker. In burnished green, they pair well with golf wear’s traditional loud colors as well as all shades of denim. $170, eccousa.com

From Treadmill to Runway: Men’s Sportswear Smartens Up

Sports gear for men, from track pants to sweats and trainers, has had a luxury designer makeover—so you can wear it for everyday without fear of channeling your 14-year-old self

Bottega Veneta’s spring/summer 2015 menswear show at Milan Fashion Week Photo: Victor VIRGILE/Gamma-Rapho via Getty Images

July 8, 2015

FROM TRACK PANTS to sweats and trainers, men’s sportswear is in the ascendant, and it’s changing the rules of play in the office as well as out on the town.

It’s a rags-to-riches story: the rise of the humble track pant from sportswear staple to the don’t-care uniform of bad boys, to high fashion status. This season it’s all over the runways, the jewel in the crown of the “athleisure” movement that has dropped all the streetwear/ageing mobster references and taken sports gear to new levels of luxury.

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Get the Look | AMI Alexandre Mattiussi jacket, €380, novoidplus. com; Ultrasone edition 8 headphones, £1,059, selfridges.com; Dundas London green linen shirt, £110, dundaslondon.com; Acne Studios Ryder tracksuit trouser, €240, acnestudios.com; Church’s Mirfield sneakers, £220, church-footwear.com Photo: Viola Zichy for The Wall Street Journal

“The sportswear trend definitely started as a more urban and street aesthetic, but has been adopted across the board,” says Sam Lobban, senior buyer at luxury online retailer Mr Porter. “[This season] we saw a number of designers take traditional sport-inspired silhouettes and put them into luxe fabrications.”

Mr. Lobban points to Haider Ackermann’s bohemian sportswear and Bottega Veneta’s “louche corduroy, sweat and denim looks” for successfully elevating sportswear to daywear. Bottega Veneta joined Dries Van Noten in paying tribute to the late Rudolf Nureyev in collections influenced by his elegant training wardrobe of tailored track pants, tights and lightweight slippers.

This glamorization of sportswear comes as we are getting comfortable with a broader definition of what’s smart, says Kris Van Assche, artistic director of Dior Homme and previously his eponymous label KRISVANASSCHE. “The suit is no longer this obliged ‘uniform’ everyone is supposed to wear. I remember the time, not long ago, when one could not get into the bar of the Ritz hotel wearing jeans. The suit meant ‘success.’ Now, you can no longer tell.”

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Mr. Van Assche has built an aesthetic out of the balance between sportswear and formalwear, creating hybrids and “de-dramatizing” classic tailoring, going as far as to “cut a jacket in half and attach it to a hoodie.”

It’s this kind of experimentation with dress codes that has had a marked impact on menswear in recent years. The crew neck sweatshirt is now as much a fixture of daywear as its knitted counterpart, according to Mr. Lobban, and sportswear is even entering the workplace, he says. “Lanvin have a wool jersey drawstring trouser, which can pass as a smart black pant when you want a dress-down day in the office.” (£495, mrporter.com .)

‘The appeal for the average guy goes beyond being more comfortable ’

The working world is where designers face their biggest challenge slipping sportswear under the radar. “I’m self-employed and can choose what I wear,” says Richard Blakeley, a 30-year-old barrister in London, “so for non-client-facing days, designer sportswear—say, sweats with a T-shirt and blazer—is perfectly acceptable, if far from the norm.”

The appeal for the average guy goes beyond comfort. “Designer sportswear outside of the gym is a considered look that projects confidence and ease,” Mr. Blakeley says. “Sportswear dressed up well does that far better than formalwear done badly.”

Dries Van Noten showed a sporty take on the suit this season, presenting tailoring in relaxed, stretchy matte satin where the trousers looked like deconstructed track pants (£217, luisaviaroma.com ). The rule for this trend is as simple as that: elevate by replacement. Swap a jersey sweatshirt for silk, or a relaxed track pant for a more fitted, tailored version.

Mr. Van Assche has gone further, pairing tuxedos with trainers and caps in his fall/winter 2015 collection for Dior Homme. “There can be something quite historical about the ‘rules’ of male dressing up,” he says. “I liked the challenge of pushing those rules just far enough to make tuxedos look cool. In the end, it is a question of balance.”

 A Fashion Week for Men Makes Its Debut, Highlighting Runway Looks for Guys

Public School, Thaddeus O’Neil, Orley prepare for a week of fashion shows dedicated to menswear

Sketches of men’s looks for Spring/Summer 2016 from, clockwise from left, Greg Lauren, Public School, Thaddeus O’Neil, Orley. Clockwise from left: Greg Lauren; Public School; Thaddeus

July 8, 2015

American men’s fashion designers are ready to step onto the global runway.

Next week marks the inaugural New York Fashion Week: Men’s. For four days starting July 13, 56 labels will show their spring 2016 collections. The week, organized by the Council of Fashion Designers of America, aims to woo back designers who have been showing in Europe and capitalize on the current sales boom in men’s clothing.

Consumers may start to see a greater depth and variety of American menswear in stores. Labels that show in Milan and Paris make up most of what is carried in U.S. department stores. The New York runway shows could also raise the profile of American menswear labels overshadowed by the designers of women’s clothing who dominate New York Fashion Week in September.

Maxwell Osborne and Dao-Yi Chow, co-founders and co-designers of men’s tailored sportswear label Public School. Photo: Public School

“The men’s market is growing, and the consumer is more interested in menswear,” said Steven Kolb, the CFDA’s chief executive officer.

It will be a week of elaborate runway shows put on for retail buyers looking for which items to stock and magazine editors looking for which trends to feature. The calendar features a mix of American stars like Ralph Lauren, Michael Kors, and Calvin Klein, as well as up-and-coming labels.

Retailers generally place their orders in June and July, after the men’s shows in London, Milan and Paris. In the past, calendar and geography put American designers at a disadvantage when retailers were making those critical buying decisions.

Some American men’s designers chose to show in Europe. Most, though, would opt to stay home and show their clothing in showrooms in July. They would then hold a runway show in New York in September, months after many retailers had completed their purchases.

Orley, a New York-based label, used to show its men’s collection in September in New York, which was “completely off-calendar,” said Matthew Orley, one of three co-founders of the label. “We felt we weren’t able to capitalize on the good press or good reception we were receiving from our shows.“

The atmosphere of a runway show helps put a collection into a fuller context, designers say. “As much as we can show the collection on a rack to buyers, there’s a big difference showing it in a way that really represents who we are as a brand,” said Samantha Orley, a second co-founder and Mr. Orley’s wife; the third is Alex Orley, Mr. Orley’s brother.

Designers behind the menswear label Orley: Alex Orley, top left, Samantha Orley, seated, and Matthew Orley, top right. Photo: Christan Felber

With the schedule change, “buyers can hopefully be impacted by whatever we’re showing,” said Dao-Yi Chow, co-founder and co-designer of cutting-edge tailored sportswear label Public School. Thaddeus O’Neil, a relative newcomer, hopes the shift will help consumers get a deeper feel for his small après-surf line.

Designer Thaddeus O’Neil Photo: Robert Nethery

American menswear designers have long grumbled about the lack of a proper men’s week. Several big names, including 3.1 Phillip Lim, Calvin Klein Collection, John Varvatos, and Thom Browne, have been holding their men’s shows in Europe instead of New York. Michael Kors started to show his men’s collection to the press in his showroom in July, rather than mixing it in with womenswear in his big New York Fashion Week show in September.

Talk of a New York men’s week became more serious about two years ago, Mr. Kolb said. When Amazon Fashion stepped in earlier this year as a sponsor, “things began to solidify,” he said. John Varvatos chose to move his show back to New York from Milan, where he had shown for years. And big labels agreed to participate, including presentations for Ralph Lauren’s Polo men’s line, and for Calvin Klein Collection.

Designer Greg Lauren Photo: Joyce Kim

Designer Greg Lauren said he welcomes the chance to highlight his menswear. The two shows he’s had so far for his Greg Lauren label have featured far more looks for women than men. Now, “it’s going to be a big army of men—at least 50 looks,” said the designer, who is Ralph Lauren’s nephew.

Public School, which expanded its womenswear earlier this year, will move from one show featuring both sexes to a dedicated menswear presentation next week and a womenswear show in September. “It’s an expense and a lot of work doing two shows a couple of months apart,” said co-founder and co-designer Maxwell Osborne. But it is worthwhile to support American menswear, he says.

Amazon Fashion serves as the main sponsor, with additional financial support from companies including Cadillac, DreamWorks and Axe men’s grooming products, owned by Unilever.

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